An ETF, or ‘exchange traded fund’, is a fund that’s priced, bought and sold on the market just like a stock and which attempts to replicate, or ‘track’, the price movements of a stock exchange, index, sector or other measure.
ETFs may hold the underlying assets or use swaps in order to replicate the price movements of the measure. This may involve a wide range of companies and industry sectors, and this diversity can help to reduce risk.